Are you wanting to buy a particular home, only you don’t quite qualify for the amount? You have options.
First, think about your debt-to-income ratio. This is a figure that lenders look at to decide what you can qualify for; it’s calculated by comparing how much money you make to how much debt you have to pay off. Factored into this ratio are things like credit card debt, student loan debt, car payments, and similar things. Usually, to qualify for a home loan, your debt-to-income ratio can’t exceed 43%.
If a house you love is higher than what you’d be able to qualify for, one option you have is to pay off one of your debts entirely, like your car loan. For example, if you have an existing $15,000 car loan for which you pay $600 a month, paying off that loan entirely will free up $600 to you each month to put toward your house payments. That equals roughly $50,000 to $75,000 more purchasing power. However, you might qualify by putting 20%, 15%, or 10% down instead and paying off your loan.
In the end, it boils down to having a mortgage planning session to find out the ways we can structure a plan for you to get into the home you want at a monthly payment you’re comfortable with. We work with some excellent mortgage lenders to help you look at and identify your options.
If you have any questions or would like to speak with one of these lenders, reach out to us. We’d be glad to help you.